Monday Bloody Monday.

Donald Trump’s war of words with Kim Jong-Un escalated again on Monday with North Korea’s Foreign MinisterRi Yong Ho telling reporters at an impromptu presser that the U.S. has effectively “declared war” on Pyongyang and that the regime could shoot down American war planes any time it chooses.

This of course comes hot on the heels of a week during which Trump threatened to “totally destroy Rocket Man” while Rocket Man, for his part, swore to “tame the mentally deranged dotard with fire.”

There are no words to describe how absurd this is.

Tech took the brunt of the selloff while the S&P managed to rebound from the lows hit following the new threats from the North:

Treasurys of course rallied with the 10Y leading the way as yields fell as soon as Ri hit the tape:

Obviously, gold and the yen were bid immediately:

And so was the franc, with the euro falling more than 1.6% against the Swissie at one point as the drag from the German elections was supercharged by the haven bid stemming from the North Korea drama:

EURUSD fell as expected on jitters stemming from the results of the German election. Merkel prevailed, but the coalition building process is set to be fraught with difficulty and the AfD’s stronger-than-expected showing raised fresh fears about populism ahead of still more political land mines (think: Catalonia and Italy). Here’s a chart that gives you some context vis-a-vis last week’s hawkish lean from the Fed and the initial knee-jerk lower on Sunday evening when markets got their first chance to express a view on the election results:

“It’s now or never, for the EUR to correct lower,” SocGen’s Kit Juckes says, adding that “1.1700 is a natural chart target and may well be tested in the weeks ahead.”

It looks like a garden-variety technology selloff, and it is. But Monday’s mini-seizure in stocks has fingerprints of another force that has been building for weeks, a sentiment shift that could foretell the market’s tone for the rest of the year.

As losses swelled in the Fang block of technology megacaps, Monday became the 11th day in 12 that value stocks outpaced their growth counterparts, the longest stretch of outperformance since 2006. Using a lens favored by quants, companies ranked highest by cheapness were one of only three investment factors to trade higher on the day.

That’s reminiscent of what Goldman said last week. Recall this:

What is causing this? While Tech got off to a strong start in Q3 (+6% thru August), the month of September has given way to an apparent rotation away from Tech (Tech has underperformed Energy/Financials by 4-7% MTD). Based on investor feedback, investors generally acknowledge that this rotation likely has less to do with fundamentals and more to do with broader market inputs, namely:

Rotation from Growth to Value starting to pick up after the spread widened to multi-year levels during 3Q. Tech is the best proxy for growth in the market – XLK daily returns are 95% correlated to Growth factor – so as this factor rotation picks up, it is worth watching the Tech sector as a ‘source of funds’ candidate (Financials and Energy are highly correlated to the Value factor).

The Nasdaq VIX spiked hard on the day:

Emerging markets suffered as EM shares dropped the most since May while EM currencies built on losses following the war headlines. But don’t worry, lots of folks say this is a blip on the radar screen (and not like those “blips” you see on radar screens when there are incoming bombers).

For instance, Edwin Gutierrez, head of emerging-market sovereign debt at Aberdeen Asset Management, is “not concerned at all.” “The North Korea situation is not exactly something that can be hedged easily in risk portfolios and we aren’t doing anything off the back of it,” he added. [So that’s the old, "there’s no way to hedge a nuclear war, so best to just get long more risk,” strategy.]

“This is a more of a bump in the road for emerging markets,” Gary Herbert, a Philadelphia-based money manager at Brandywine Global Investment Management told Bloomberg.

Be that as it may, the CBOE’s EM ETF volatility index soared, rising more than 20% at one point:

The South Korea ETF dove just as the Ri headline hit:

Brent surged on jitters around the Kurdish referendum after Erdogan threatened to cut off the flow of crude from the region. “It’s pretty clear the Kurds are going to vote for independence and we will have yet another geopolitical hot spot in the Middle East that threatens a significant amount of oil supply,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, told Bloomberg in a phone interview. Also, “golden cross” – if you’re into that kind of thing:

Obviously, you’ll want to watch Asia overnight to see what the reaction is to all of this.

And don’t forget to stay tuned to Trump’s Twitter feed to find out what gets bombed first. The choices are: